WASHINGTON, June 7 (Reuters) - Signaling that hopes for a
deal on a transportation construction bill may be fading, U.S.
House of Representatives Speaker John Boehner on Thursday
floated the idea of a six-month extension of current funding to
push the issue past the November elections.

Boehner told reporters that if House and Senate negotiators
fail to agree on new long-term funding by June 30, when the
latest stop-gap authority for road, bridge and rail transit
projects expires, he would not want another short-term
extension.

"Frankly, I think if we get to June 30, there would be a
six-month extension and move this thing out of the political
realm that it appears to be in at this moment," Boehner said.

The fight in Congress over the transportation bill is one of
several being waged between Democrats and Republicans on
high-profile issues, with each side trying to gain the upper
hand in their bids to win re-election on Nov. 6.

The highway bill is particularly important as it would
authorize major job-creating construction projects across the
United States at a time when the economic recovery is losing
momentum and jobs are the top issue for voters.

Boehner said he still wanted agreement on a long-term
transport bill. But House members are preparing to depart from
Washington for another recess next week, leaving just two weeks
to reach a deal, pass it through both chambers and get a
signature from President Barack Obama. Four weeks of haggling so
far has produced little progress on core differences.

"I'm very hopeful that they will get into serious
discussions quickly," Boehner said.

A major sticking point in the House-Senate negotiations over
the two-year, $109 billion transportation bill passed by the
Senate is House Republicans' insistence on including approval of
TransCanada Corp's $7 billion Keystone XL oil pipeline.

Asked whether Boehner would insist on Keystone approval as a
condition of a six-month extension or agree to a "clean"
extension of current law, Boehner's spokesman, Kevin Smith, said
no decisions have been made at this point.

President Barack Obama opposes any move to fast-track the
project until new environmental reviews are completed.

The 1,700-mile pipeline, which would carry crude from
Canadian oil sands to Texas refineries, was not included in a
compromise offer made by lead Senate negotiators Barbara Boxer,
a Democrat, and James Inhofe, a Republican.

Boehner also has had a difficult time getting his own caucus
to support a transportation bill -- even one with Keystone and
new oil drilling rights included -- because of its costs. Many
fiscal conservatives backed by the Tea Party movement will not
support a multibillion spending bill at a time of high budget
deficits.

DELIBERATE ROADBLOCKS?

Since presenting the Senate plan on Tuesday, Boxer has not
received a counteroffer from House negotiators in the
closed-door talks.

The senator from California complained that another
extension would exhaust the Highway Trust Fund because it is
currently not collecting enough gasoline taxes to support
current project spending levels. The fund is expected to be
depleted sometime after Oct. 1.

"I am very disappointed that Speaker Boehner is even talking
about a long-term transportation extension, which would lead to
the Highway Trust Fund going bankrupt, when all of our efforts
must be focused on passing a transportation bill by the June
30th deadline, Boxer said in a statement. "Three million jobs
and thousands of businesses are at stake."

Although the current extension is keeping projects going
that have already started, the uncertainty over long-term
funding is hampering states' ability to proceed with long-term
projects, preventing the hiring of hundreds of thousands of
idled construction workers.

Construction was particularly hard-hit in May's dismal U.S.
jobs data released last week, with employment in the sector
falling 28,000 during the month.

House Democratic Leader Nancy Pelosi accused Republican
leaders on Thursday of trying to undermine Obama by deliberately
holding up the transport bill and thus keeping the U.S. economy
weak for political gains in November's elections.

"They're afraid of passing a transportation that would save
more than 2 million jobs, that puts hundreds of thousands of
construction workers back on the job," she said.
(Additional reporting by Thomas Ferraro and Roberta Rampton;
Editing by Richard Cowan and M.D. Golan)